2016 (6) TMI 289 - HC - Income Tax

Reopening of assessment - reasons to believe - Held that - It is apparent that at the time when the earlier assessment came to be framed under section 143(3) read with section 147 of the Act, all the primary facts were before the Assessing Officer and he had thought it fit to examine certain transactions and on being satisfied about the genuineness thereof, had accepted the return as filed by the petitioner. Now, on the basis of the very same set of facts, the assessment is sought to be reopened merely by placing reliance upon the survey carried out by the Investigation Wing under section 133A of the Act during the course of which no fresh material has come to light, but on the basis of the very same transactions recorded in the cash book, the assessment is sought to be reopened. Under the circumstances, it cannot be said that there is any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the year under consideration. In the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, the Assessing Officer lacks jurisdiction to reopen the assessment beyond a period of four years from the end of the relevant assessment year. The impugned notice which has been issued beyond a period of four years from the end of the relevant assessment year, without there being any basis for formation of the requisite belief that income chargeable to tax has escaped assessment on account of any failure on the part of the petitioner to disclose fully and truly all material facts, therefore, cannot be sustained. As this is not a case where the Assessing Officer has formed his belief on the basis of subsequent new and specific information that income chargeable to tax has escaped assessment on account of omission on the part of the petitioner to make full and true disclosure of primary facts. In this case apart from the fact that primary facts were already on the record, the Assessing Officer at the time of framing assessment under section 143(3) read with section 147 of the Act noticed the entries made in the cash book and called for details from the petitioner and formed an opinion thereon. Thus, this is a case of a mere change of opinion based on the self same material which had already been examined at the time when the previous assessment came to be made. - Decided in favour of assessee.

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment.
2. Allegations of failure to disclose material facts fully and truly by the petitioner.
3. Whether the reopening of the assessment is based on a mere change of opinion.

Analysis of the Judgment:

Issue 1: Validity of the Notice Issued Under Section 148
The petitioner challenged the notice dated 30th March 2015 issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the assessment year 2008-09. The initial return was filed on 31st July 2008 and processed under Section 143(1). Later, the assessment was reopened on 15th March 2013 due to huge cash deposits, leading to a reassessment under Section 143(3) read with Section 147 on 24th March 2014. The petitioner argued that the reopening was based on the same grounds as the earlier reassessment and thus constituted a change of opinion.

Issue 2: Allegations of Failure to Disclose Material Facts
The petitioner contended that all material facts, including cash deposits and their sources, were disclosed during the first reassessment. The respondent argued that a subsequent survey revealed cash deposits of ?96.85 crores, significantly higher than the ?4.70 crores initially examined, and that the petitioner failed to disclose the names and PANs of the beneficiaries. The petitioner maintained that the addresses and PANs were not primary facts required to be disclosed in the cash book.

Issue 3: Reopening Based on Change of Opinion
The court examined whether the reopening was based on new material or merely a change of opinion. It noted that the initial reassessment involved detailed scrutiny of cash deposits, and the current reopening was based on the same set of facts. The court emphasized that once primary facts are disclosed, the duty of the assessee ends, and it is for the Assessing Officer to draw inferences. The court found that the reopening was based on the same material already examined, constituting a change of opinion.

Conclusion:
The court held that the impugned notice issued under Section 148 was invalid as it was based on a change of opinion without any new material. The court quashed and set aside the notice, ruling that the reopening of the assessment was without jurisdiction and beyond the permissible period of four years from the end of the relevant assessment year. The court emphasized that the petitioner had fully and truly disclosed all material facts necessary for the assessment, and the Assessing Officer had already examined these facts during the first reassessment.

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